*

CEO says UK's drug pricing is lowest in Europe

*

Merck ( MRK ) and AstraZeneca ( AZN ) halt UK investments over pricing

issues

*

UK claims commitment to making Britain a top life sciences

hub

By Muvija M

LONDON, Sept 24 (Reuters) - Eli Lilly ( LLY ) Chief

Executive Dave Ricks said Britain was "probably the worst

country in Europe" for drug prices in an interview with the

Financial Times, intensifying pressure on the government to

improve market conditions for drugmakers.

The remarks are part of a broader backlash from

pharmaceutical giants, including Merck ( MRK ) and AstraZeneca ( AZN )

, who have paused or scaled back investments in Britain

over the challenging environment.

Ricks said Britain would miss out on new drugs if it did not

raise prices and scrap a rebate scheme which requires companies

to contribute a portion of their UK drug revenue to the

state-run NHS.

The VPAG rebate scheme - an agreement between the

government, the NHS and the pharmaceutical industry - is aimed

at improving patient outcomes, managing the NHS' medicine bill,

and supporting the life sciences industry.

Media reports have said that talks with the government over

the scheme have been deadlocked.

The health department did not immediately respond to a

Reuters request for comment on the status of the negotiations.

UK CHARGES US FOR OUR OWN SUCCESS, SAYS LILLY CEO

Britain pays less for drugs than other developed countries,

Ricks said, telling the FT: "Unless that changes, I don't think

they will see many new medicines and I don't think they will see

much investment."

"That's the UK's choice, but we react to those choices," he

said, adding that the company "would like to get rid of the

clawback scheme called VPAG . . . which charges us for our own

success."

In response, a government spokesperson said Britain was

working closely with industry to deliver on its goal of making

"the UK the destination of choice for life sciences companies to

invest," adding it was open to future engagement.

In August, U.S.-based Lilly announced a temporary pause in

UK shipments of its weight-loss drug Mounjaro, ahead of a new

price hike of up to 170% for the treatment.

This month, Merck ( MRK ) said it was scrapping research operations

in London, citing a challenging business environment, while

AstraZeneca ( AZN ) paused a planned 200 million pound investment in its

Cambridge research site.